Our retail research team has created 3 stock lists, namely Growth, Value and Yield.
|The Growth List comprises of small-mid capitalisation companies with business catalysts which will potentially grow their earnings in the near future. The Growth portfolio would be suitable for investors looking for higher returns and are willing to tolerate the risk of higher short-term volatility of stock prices.|
|The Value List focuses on companies which are undervalued based on their share prices as compared to the company fundamentals. It would be suitable for conservative investors who prefer price stability and have a longer investment horizon.|
|The Yield List comprises of stocks that provide consistent dividend pay-out. It would be suitable for investors whose primary focus is to gain regular dividend income from their investments.|
December Market Overview
The Singapore market ended Dec on a positive note as the STI added 0.9% on easing recessionary fears and US-China trade tensions with both sides preparing to sign a partial trade deal on 15 Jan.
For the whole of 2019, the STI notched up 5%, giving a total return (including dividends) of 9.4%. On an equal weighted basis, the average gain of the 30 constituents was 8.6% with 17 chalking double digit returns, led by food staples and property counters.
Against this backdrop, Market Insight's Growth, Value, Yield (GVY) basket of stocks delivered an average total ytd return of 20%, outperforming the benchmark index by a wide 11.4ppt margin.
For 2020, all positions will be reset to prices as at 31 Dec ’19.
Growth List +21.5% YTD
The Growth portfolio was propelled by AEM and Frencken in the last quarter, as both these technology-related counters are expected to benefit from the anticipated recovery in the global semiconductor industry, largely driven by secular growth trends in 5G, AI and IoT.
This was also supported by strong performance from Penguin Int'l, which benefitted from higher vessel deliveries in Nigeria and increased chartering activities.
Value List +14.1% YTD
As part of our year-end portfolio rebalancing, we are removing Japfa from the Value basket after the group recently proposed a 1-for-10 rights issue to repay debt. While valuation is undemanding relative to regional food stocks, the ongoing African swine flu crisis in Vietnam and unpredictable broiler/DOC prices in Indonesia places a stiff overhang on its share price.
Meanwhile, we are switching Koufu from the Growth portfolio to Value backed by its strong net cash position though the group may incur some gestation costs for its expansion, both locally and overseas.
Yield List +20.7% YTD
The Yield portfolio continued to be supported by yield compression following the Fed interest rate cut end Oct, possibility for raising of leverage limits for S-REITs and overseas growth drivers.
FLT has proposed to merge with FCOT in a $1.5b cash-and-stock deal and acquire the remaining 50% stake in Farnborough Business Park (FBP) from sponsor Frasers Property for £90.1m ($157.7m).
The merger will require the approval of FLT and FCOT unitholders as well as the High Court and should close by end Mar/Apr ’20. We will review our position after its 4Q19 results in early Feb.
Note: * Priced in USD
This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within Maybank Kim Eng Securities.
This document is being distributed for general information only and it does not constitute an offer, recommendation or solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This document is for general evaluation only, it does not take into account the specific investment objectives, financial situation or particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons.
Opinions, projections and estimates are solely those of Maybank Kim Eng Securities at the date of this document and subject to change without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance. Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be).
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